Nvidia also offers a range of AI solutions. Its new computer architecture, called Blackwell, is specifically designed for AI. Each Blackwell GPU contains over 200 billion transistors, making it the most powerful chip in the world, according to Nvidia. The company’s chief financial officer, Colette Kress, noted that customer demand for Blackwell is so great: “We are on track to exceed our previous multi-billion dollar Blackwell sales estimate.”

In addition to its GPU strength, the company also offers software for AI, such as Nvidia NIM, a suite of tools to simplify the creation of generative AI products. Many companies have adopted NIM including ServiceNow And Broadcom. This integration of hardware and software brings customers deeper into Nvidia’s AI ecosystem and is another key strength of the company.

Finally, CEO Jensen Huang said he believes the AI ​​era is ushering in a new industrial revolution, with data centers turning into AI factories as technology becomes more and more dependent on AI. This means that the cloud computing market, expected to reach $2.3 trillion by 2032, would increasingly move to accelerated computing architecture and therefore require GPUs. If he is right, as he meant about accelerated computing, then tapping into this huge market offers Nvidia a bright future as the leader in AI chips.

But what about Nvidia stock’s incredible gains this year? Does that mean it’s overrated? Comparing the company’s price-to-earnings (P/E) ratio, a widely used metric for assessing stock valuations, with that of other semiconductor companies will help answer this question.

The P/E ratio tells you how much investors are willing to pay for a dollar profit. As the chart shows, Nvidia’s P/E ratio is by far the lowest compared to other big names in the semiconductor industry, suggesting that the stock still represents good value.

The company’s current outstanding financial performance, coupled with the success of products like Blackwell and the long-term growth of the AI ​​market, means Nvidia is well positioned for years of prosperity to come. Despite share price gains this year, Nvidia remains reasonably valued, making it a great investment to capitalize on the secular artificial intelligence trend.

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Robert Izquierdo has held positions at Advanced Micro Devices, Intel and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Nvidia and ServiceNow. The Motley Fool recommends Broadcom and recommends the following options: Short February 2025 $27 calls on Intel. The Motley Fool has a disclosure policy.

That’s why Nvidia remains a top artificial intelligence stock to buy. Hand Over Fist was originally published by The Motley Fool